The challenge comes with happy forecasts: economists have assessed the biggest risks and opportunities for Lithuania

The data published this week shows that in 2020. In the second quarter, the country’s gross domestic product (GDP) at current prices amounted to 11,500 million. EUR. Compared to 2020 In the first quarter, the real change in GDP, seasonally adjusted and on business days, was negative by -5.1%. Comparing the second quarter of this year with the same quarter of last year, Lithuania’s GDP was 3.7 percent. lower.

The deepest recession has been avoided.

Swedbank chief economist Nerijus Mačiulis, when asked what determined these indicators, said that the behavior of Lithuanians after easing quarantine conditions had a significant impact.

“We just realized that there was pessimism and unfounded panic. We have seen forecasts and scenarios of 12 to 20 percent. Contraction of the GDP, all this was difficult to imagine how it could become reality, but we see that the reality did not become e Even the most optimistic forecasts were not so optimistic: the economic recovery was very fast and the recession was not very great. First, the fact that the residents, after relieving the quarantine, wanted to quickly return to normal life, consumed , they went to stores without being able to go abroad, they vacationed in Lithuania and they spent money here that they would have spent abroad contributed a lot. The most interesting thing is that the negative impact on the industry was very brief, “said N. Mačiulis in the program.

According to the economist, according to some indicators, Lithuania even leads in almost the entire European Union.

“Lithuania is one of the best prepared countries if we look at how we were at the end of last year. Corporate and household finances were very stable, public finances were in surplus for several years in a row and there were no foreign trade deficits. All Structural indicators have shown that the economy is not overheated, there is no reason why it should decline and stay in the pit for a long time, as happened in 2009, of which not all other EU countries can boast. another reason is that we were not very affected by the virus, there were not many humanitarian and social losses, people and companies were not afraid, and opportunities to borrow and stimulate the economy helped avoid the deepest recession, “he said .

Internal consumption shows wonders

Luminor economist Sigismund Mauricas mentioned in the program that according to some indicators, Lithuania is one of the least economically affected countries by the coronavirus.

“The most important pillar that has helped us survive at least this first phase of the crisis with minimal losses is internal consumption, which has really worked wonders in recent months.” For example, in June, the annual growth of retail sales reached almost seven percent compared to last year.

An indicator of consumer expectations was also released on Thursday, and Lithuanian households are the most optimistic in the European Union. Lithuania is the first, followed by Denmark, Finland, the Scandinavian countries and the Czech Republic. Card billing data also shows that internal consumption continues to move. Another thing is the real estate market, where we do not see such stagnation. Another important thing is our industry, which has suffered less from the structured industry, since the majority is occupied by the food industry, which is generally less susceptible to coronavirus, ”said Ž. Mauricas

Investment opportunities

The economist also mentioned that at the moment Lithuania has a very good opportunity to attract investment, and there are threats that the EU economy is limping, but there are also opportunities.

“It just came to our attention then. The threats are such that overall demand may decrease in the EU, but the possibility is that our entire region will look relatively better. We have done a good job, we have been fighting for it for a long time, we have tightened our belts, we have joined the OECD, we have had a surplus budget, our credit ratings have improved. We have a good enough platform, but we are still less developed in terms of our level of economic development. Our facade is more beautiful than the interior, and to improve that internal situation, we must take advantage of the opportunity to attract investment, and that window opens “, Ž. Mauricas

N. Mačiulis also mentioned the unprecedented economic stimulus, and one of the biggest challenges for the future is the possible overheating of the economy.

“There is not much reason to be pessimistic now. It is clear that everyone is now bending the second wave of the virus, but in economic terms it is not the same as the first, because the treatment facilities are ready, they have more intensive care units, more masks, fans, they know how to deal with this problem.

There is no need to freeze economies, as was done this spring, and probably no country in the world will. We also have an unprecedented economic stimulus in the world: money is being printed, billions of dollars are being invested in the market. Government 10-20 percent. Borrowing, from left to right, I think we will talk very quickly, not about the depth of the economic recession, but how quickly one or another economy will buy, “says N. Mačiulis.

“One of the biggest challenges in Lithuania, after the consequences of the crisis have been eliminated or almost eliminated, will be to avoid overheating the economy.”

The salary forecasts were not surprising

On Thursday, the Bank of Lithuania released information indicating that salary developments show signs of recovery. Before the pandemic, wages in most activities grew by 9-10% in March-May. Growth has slowed to 3-5% in 2006, and the latest data from June shows that wage growth is picking up and even reaching pre-pandemic levels. “Such figures are not very surprising to economist N Mačiulis.

“There is nothing impressive or unexpected here. It was impressive and unexpected for me to look at the forecasts of the European Commission or the forecasts of the Bank of Lithuania, it was mathematically difficult to imagine such a situation when the monthly minimum wage and the salary of public sector employees They increased a tenth from the beginning of this year.

Julio also saw an increase in the need for employees, the need for employees, the industry has orders, domestic demand is booming, we had a big problem of employees until this year, which also led to the growth of wages, so that no one should be surprised.

“If that crisis lasted a couple of months and consumption returns to normal, it is natural that there is a lot of pressure to increase wages, so we will have to make sure that wages grow sustainably so that productivity increases at the same rate “Mačiulis said.

It’s true, like Ž. Mauritius, not all sectors will recover by the end of the year, as the crisis has changed the lives of many people for a long time.

“It just caught our eye then. What makes this crisis special is that, unlike previous crises, it has affected different sectors in very different ways. Most of the changes are not temporary but permanent. For example, Buying goods remotely, working from home will change the market in the long term, both the demand for housing will decrease and the demand for transportation systems will decrease because there is no need to go to work, the demand for clothing will decrease and, in terms of exchange , we see a shortening of supply. Chains There are many offers to buy products from farmers. All these things will definitely remain and some sectors will definitely have challenges, “says Ž Mauricas